SAP Raises 2021 Targets Despite 2Q Fall in Operating Profit, Revenue
July 21 2021 - 12:40AM
Dow Jones News
By Mauro Orru
SAP SE said Wednesday that operating profit and revenue fell in
the second quarter, but the company raised its targets for the year
as it expects an acceleration in cloud revenue growth.
Reporting on a non-IFRS basis, the German software company said
operating profit for the quarter slipped to 1.92 billion euros
($2.26 billion) from EUR1.96 billion for the second quarter of
2020, with its operating margin falling to 28.8% from 29.1%.
However, net profit increased to EUR2.06 billion from EUR1.38
billion last year.
Total revenue fell to EUR6.67 billion from EUR6.74 billion, with
cloud revenue up to EUR2.28 billion from EUR2.04 billion but
software-licenses revenue down to EUR650 million from EUR773
million.
SAP is pivoting away from software-licenses sales, once its
biggest revenue stream, to subscription-based cloud services,
banking on a more profitable and predictable model based on
recurring revenue.
"This has been another strong quarter with accelerating growth
for SAP's cloud portfolio. We saw excellent customer momentum and
adoption and are raising our outlook for revenue and profit," SAP
Chief Financial Officer Luka Mucic said.
SAP now expects non-IFRS operating profit at constant currencies
between EUR7.95 billion and EUR8.25 billion. It previously guided
for operating profit between EUR7.8 billion and EUR8.2 billion.
Non-IFRS cloud revenue at constant currencies should come in
between EUR9.3 billion and EUR9.5 billion. SAP previously expected
cloud revenue between EUR9.2 billion and EUR9.5 billion.
Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94
(END) Dow Jones Newswires
July 21, 2021 01:27 ET (05:27 GMT)
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